Here's your opportunity to help employees struggling with student debt

The COVID-19 pandemic has brought to light acute uncertainty for student loan borrowers and many are actively seeking holistic approaches and solutions to deal with debt. Rapidly changing incomes and policies surrounding student loans has resulted in borrowers who are looking for full-spectrum solutions that can be personalized to meet their changing needs. Amid this uncertain environment, there is an opportunity for employers to help their employees who may be struggling with the financial grips of student debt.

The relationship of employers and employees

In light of the new tax-advantaged treatment of employer student loan repayment, both employers and borrowers should explore student loan repayment as a standard portion of all compensation packages.

Debt holders that work for an employer offering student loan repayment can save an average of more than $30,000 in loan payments and taxes as a result of the benefit. This in turn would eliminate more than five years of time in repayment.

It’s important to note there’s also a provision in the SECURE Act 2.0 which would allow employers to make tax-free contributions to their employees’ 401(k) plans. These matches are potential game-changers for employees burdened by hefty student loan payments. Contributions would allow borrowers who might otherwise be unable to save for retirement to get dollars into tax-advantaged savings vehicles earlier.

Encourage employees to take advantage of payment suspensions

When assuming office in January, President Biden directed the Department of Education to extend the coronavirus-related student loan payment suspension and 0% interest rate on certain federal student loans until the end of September 2021.

Employers should encourage their employees to continue making payments during this time regardless. Right now, 100% of any payment made towards federal loans goes directly towards reducing the principal of the loan.

For borrowers who are early in their repayment journey, this means every dollar sent to pay off debt will effectively end up saving more over time.

Consider an income driven repayment plan

Employers should also encourage employees to evaluate if an income driven repayment plan might be advantageous. With this type of plan, monthly payments commensurate with an employees’ salary.

Personalized tools can help to alleviate this once-arduous process in just a few minutes. The average borrower who switches to an income-driven repayment plan will save $280 per month when they re-enter repayment.

Utilize repayment platforms

Borrowers should take advantage of the many personalized repayment platforms and tools at their fingertips. Users who take advantage of such tools can save tens of thousands on the total cost of their student loans. In particular, borrowers should seek technology that utilizes efficient debt management tools as well as bank-level security.

Employers should encourage employees to seek scalable solutions that can match their individual financial situation to a personalized plan. Rather than seeking one-off solutions that may or may not match their needs in the years to come, borrowers and their employers are best served by a holistic, scalable, personalized approach to student loan debt management.

Laurel Taylor is the Founder and CEO of FutureFuel.io. Laurel’s vision has been steadfast since first founding the firm in 2016. Laurel envisioned a new normal across the workplace, one that would offer benefits that address student debt, just like tuition assistance to retirement savings, serving the full spectrum of an employees’ financial health and wellness. Laurel’s own personal experience struggling with student debt continues to serve as driving force behind her relentless pursuit to solve this problem, in partnership with employers, policy makers, financial institutions and universities.